<h2>What is NUPL?</h2> In addition to SOPR (Spent Output Profit Ratio) in Bitcoin on-chain analysis, there is another classic indicator—NUPL (Net Unrealized Profit and Loss), which is also a commonly used tool for judging market sentiment and capturing cycle turning points.<img src="https://static2.fansone.co/images/7b3e2e43-49ee-43ad-a1b2-c7613c7af460.avif" /><blockquote>NUPL is calculated as: (Market Cap − Realized Cap) ÷ Market Cap.</blockquote> Here is a brief explanation of two terms: <ul><li>Market Cap: The market capitalization calculated by multiplying the current Bitcoin price by the circulating supply, representing the valuation the market is currently willing to assign to Bitcoin.</li></ul> <ul><li>Realized Cap: Not calculated using the current price, but by taking the price at the last time each unspent Bitcoin on-chain was moved, multiplying by the quantity, and summing them all up, representing the concept of the market’s “average cost basis.”</li></ul> Therefore, NUPL essentially answers one question: Compared to the market’s average holding cost, is the current market valuation showing large profits or large losses? <h2>How to Interpret the Values?</h2> Assume that at this moment, everyone in the market simultaneously settles their coins at the current market price: <ul><li>NUPL &gt; 0: Indicates that more investors are in profit than in loss. Because market cap exceeds realized cap, it means the market trading value is higher than the “expected cost value” on-chain.</li></ul> For example, if NUPL reaches 0.75, it means market cap is 4 times the realized cap. It can reasonably be inferred that most moved coins are in profit, and this large price gap itself may create selling pressure. <ul><li>NUPL &lt; 0: Indicates that more investors are in loss than in profit. At this point, realized cap exceeds market cap, meaning the market trading value is lower than the on-chain cost basis.</li></ul> For example, if NUPL reaches -0.5, it means market cap is only two-thirds of realized cap. It can reasonably be inferred that most moved coins are in loss, and such a price gap may instead create buying motivation (people feel it is cheap). <h2>Looking at the Trend: Which Direction Is Sentiment Moving?</h2> NUPL rising trend: Indicates that more and more investors are turning profitable, which naturally increases the motivation to “take profits,” and selling pressure rises accordingly; it also means market cap is gradually exceeding realized cap, making selling coins profitable. NUPL falling trend: Indicates that more and more investors are falling into losses, at which point the motivation to “cut losses” actually decreases (no one wants to sell at a loss), so selling pressure reduces; it also means realized cap is gradually exceeding market cap, making selling coins increasingly unprofitable. <h2>Practical Application: Key Thresholds</h2> The most commonly used aspects of NUPL are these two rules of thumb: <ul><li>NUPL &gt; 0.7: Usually viewed as a signal close to the market top. This means market cap greatly exceeds realized cap, the market is in a state of high profitability, and investors have strong motivation to take profits, which can easily drive up selling pressure and lower the average cost basis. It serves as a warning zone reminding investors to be cautious and consider taking profits in batches.</li></ul> <ul><li>NUPL ≤ -0.2: Usually viewed as a signal close to the market bottom and a potential buying opportunity. This means realized cap exceeds market cap, coins in the market are generally in a loss-making state where selling is unprofitable. Under such conditions, strategic investors often begin to accumulate at lower prices, which may instead push the price to form a bottom.</li></ul> <blockquote>⚠️ Note: These two thresholds are primarily market rules of thumb from before 2024.</blockquote><blockquote>With the launch of spot ETFs and the addition of new types of buyers such as DAT (corporate-level digital asset treasuries) into Bitcoin’s holder structure, the market’s holding structure and capital characteristics have already changed from before. From my own observation, after this structural shift, NUPL’s volatility has shown a converging trend. Whether the past rules of thumb—“above 0.7 is a top” and “below -0.2 is a bottom”—still apply requires more cycle data for verification. I will continue to monitor whether NUPL’s correlation with Bitcoin price is undergoing structural change.</blockquote> <h2>Simple Summary for New Readers</h2> NUPL can be thought of as the market’s average profit-and-loss thermometer—higher values mean the market is greedier, everyone is enjoying bigger gains, and it is closer to a point where caution is warranted. Lower values (entering below the zero line) mean the market is more fearful and people are generally accepting losses, which may instead be a zone for picking up bargains. When viewed together with SOPR, SOPR captures whether the coins being moved right now are in profit or loss, while NUPL captures the overall profit-and-loss atmosphere of the market. The two complement each other to provide a more complete picture of the market’s cycle position.

Bitcoin On-Chain Analysis Basic Concepts - NUPL

--- Data Observation --- Over the past two weeks, ETH rose from $1,876 on 8/10 to $2,507 on 8/26, an increase of over 30%. Logically, many people's first reaction would be: the on-chain activity should also be hot, right? But the data shows that's not necessarily the case. According to Glassnode's statistics, during the same period, ETH's active address count dropped from 499,000 on 8/20 to 414,000 on 8/26; moreover, from 8/22–8/23 it once fell into the 350,000–370,000 range. In other words: prices are rising, but on-chain usage (at least in terms of active addresses) is declining, and the two lines are moving in opposite directions. If we pull the timeline back a bit further, the situation is even more interesting. At the beginning of August, it was the opposite: ETH's active addresses once surged to a near six-month high (approaching one million per day), but the price was mostly stuck around $1,870, even dipping slightly. Looking at these two periods together, it's like a relay race: first on-chain activity heats up, but prices don't follow; then it's prices' turn to catch up, but on-chain activity cools down instead. This actually reminds us of one thing: "active addresses" and "price" are not necessarily two indicators that move in sync. - Active addresses are more like looking at "how many people are using this chain"—influenced by factors such as L2 expansion, airdrops, DeFi activities, bot interactions, etc.- Price, on the other hand, reflects "how much capital the market is willing to pay for this asset"—more easily driven by factors like ETF fund flows, overall risk sentiment, leverage positions, etc. Because the driving forces are different, short-term divergences are actually quite common. For those just starting to look at on-chain data, a better approach is to view "usage-type indicators" and "capital/price-type indicators" separately; only when both sides consistently show signals in the same direction is it more suitable to use them as references for trend judgment. Conversely, if a single indicator is at odds with the price, it's most likely not a data contradiction, but a reminder that we need to look from more angles together.

Activity Up, Address Numbers Down—What Does This ETH Wave Tell Us?

Bitcoin is currently standing above $78,000, with both technical indicators and on-chain data sending the same signal: an attempt to build a bottom is underway, leaning bullish in direction, but it has not yet faced a real test. Technical Analysis: Both 200MAs Have Been Recovered The price has simultaneously moved above the daily 200MA and the weekly 200MA.<img src="https://static2.fansone.co/images/81f670a3-1231-4fcc-837c-d838038111f3.avif" />After breaking below the weekly 200MA in early June this year, the price oscillated around the 200WMA for the next two months until it broke out strongly on August 19. This pattern also appeared in 2019. Since the 200WMA has always been strong support, historically Bitcoin bear markets have consolidated near this zone for up to about 1 year and 3 months, or as short as about 3 weeks. Therefore, repeated fluctuations in this range can be seen as a common signal of the bottom-building phase.<img src="https://static2.fansone.co/images/bcd2a061-a651-45ca-a8d2-59924a32a42b.avif" />However, there is still one hurdle above: the daily 365MA (around $82K). On September 3, the price once surged to $82,293 and touched this line, only to be pushed back near $79,000. Whether the daily 365MA can hold with a close is the key technical resistance to watch closely next. On-Chain Data: STH/LTH Cost Basis Has Not Yet Been Retested Comparing the STH &amp; LTH Realized Price chart, the current price is above the average cost of both short-term and long-term holders.<img src="https://static2.fansone.co/images/f0a4e0ef-f246-436c-af70-5bf26ba63653.avif" />Looking at SOPR data: STH-SOPR is hovering just above 1.00 (short-term buyers are roughly breaking even, market sentiment is neutral), while LTH-SOPR continues to sit at levels representing cycle bottoms (below 1). <img src="https://static2.fansone.co/images/99ac4124-f86c-476e-9250-72a1efce4085.avif" /><img src="https://static2.fansone.co/images/d7e86767-8617-41cf-8d75-976a21bb8576.avif" />Unrealized Profit/Loss <a href="https://metaverse9429.com/btc-dashboard/" rel="noopener noreferrer" target="_blank">NUPL sits at 0.32</a> (&gt;0 indicates holders are on average in slight profit), and Market Value to Realized Value <a href="https://metaverse9429.com/btc-dashboard/" rel="noopener noreferrer" target="_blank">MVRV sits at 1.4</a> (&gt;1 indicates the market trades at a premium to realized cost), both falling in the optimistic recovery or transition zone. Together these figures point to: sentiment turning positive, but far from overheated. This is a healthy signal, though it also means the bottom support has not yet undergone a real stress test. Don't Ignore: This Rally Has a Short Squeeze Component The sharp surge from August 19-21 saw over 17,000 BTC in short positions forcibly liquidated, meaning it was partly "squeezed" higher rather than purely built on new buying. Spot Cumulative Volume Delta (CVD) hit a new range high positive at the same time, showing spot buyers also joined in. However, this momentum has recently turned negative while price remains supported at high levels, indicating selling pressure and support are still battling without a clear winner.<img src="https://static2.fansone.co/images/48ba5f85-1c98-496d-85db-937a3d8a22fc.avif" />Conclusion The current setup is "technicals turning bullish, on-chain sentiment turning positive, but bottom support and overhead resistance have not yet been truly validated." Recovering the 200-week/daily moving averages is solid progress, and the fact that the STH/LTH cost basis has not been broken is a plus. Yet until the 365MA is reclaimed with a close and spot buying momentum returns, this remains an "attempt to leave the bottom," not a "confirmation of leaving the bottom." The closing prices over the next few weeks will be the most critical window to validate this thesis.

Emerging from the Bottom, But Not Yet Steady 

If you want to use on-chain data to judge "whether the market is moving old coins out to spend", CDD is a very useful indicator. It doesn't look at transaction volume alone, but: exactly how many old coins that have been dormant for a long time are being spent. <h2>What is CDD?</h2> Coin Days Destroyed is a commonly used on-chain data indicator (especially common in Bitcoin analysis), used to measure: how many long-term holders (LTH) coins are being moved. Unlike regular "transaction volume", which treats every transfer as equally important, CDD weights coins based on how long they have been dormant (unspent) in the wallet. Simply put: the longer a coin has been unmoved, the more "weight" it carries once spent. <h2>How It Works (with formula)</h2> Every day a coin sits idle in a wallet, it accumulates 1 coin day. When the coin is finally transferred or spent, the accumulated coin days are reset to zero — meaning they are "destroyed". <blockquote>Coin Days Destroyed = number of coins moved × days dormant</blockquote> ### Example (super intuitive) - Example A: Moving 1 BTC that has been dormant for 100 days → destroys 100 coin days.- Example B: Moving 100 BTC that were only bought yesterday (held for just 1 day) → also destroys 100 coin days. Key point: CDD doesn't just look at how many coins are moved, but how old the moved coins are. <h2>Why Does CDD Spike?</h2> When you see a CDD spike, it usually means coins dormant for a long time are being spent — i.e., the coin age of spent UTXOs has suddenly increased.<img src="https://static2.fansone.co/images/692858ab-df8c-48d3-91f8-be064496431a.avif" />Common reasons generally fall into these four categories (they may occur individually or in combination): ### 1) Long-term holders become active (reallocating or distributing) <ul><li>Coins dormant for months or even years are moved.</li><li>This could be distribution (selling into market liquidity), or simply old coins being reallocated: changing wallets or strategies, not necessarily selling immediately.</li><li>Historically, CDD peaks often coincide with local tops. Rising CDD may indicate increasing selling pressure.</li></ul> ### 2) Exchange-related flows (old coins entering exchanges) <ul><li>Once old coins are transferred to exchanges, CDD rises significantly.</li><li>If the spike coincides with rising exchange inflow or increased LTH Realized Profit, pay extra attention: it may indicate distribution into the market.</li></ul> ### 3) Large UTXO consolidation / wallet migration <ul><li>This could be operational: consolidating many small, older UTXOs into fewer transactions, or migrating funds to a new wallet.</li><li>Even if not for selling, the on-chain footprint still shows "old coins being spent", so CDD jumps.</li></ul> ### 4) Liquidity events pulling old coins back into the market <ul><li>Sharp volatility may prompt long-term holders to move assets (profit-taking, hedging, or liquidity needs).</li><li>The key is not necessarily the price itself, but that older supply is starting to be spent.</li></ul> In summary, CDD serves as a warning light for "whether old coins are showing unusual movement". When the value suddenly amplifies, first suspect that long-term coins are being moved, then use exchange inflows and profit indicators like SOPR to distinguish between distribution, wallet reorganization, or other liquidity needs. Next, we will continue explaining SOPR.

Bitcoin On-Chain Analysis Basic Concepts - CDD

本文純屬心得分享，內容不構成投資建議。加密貨幣市場波動幅度巨大，投資有歸零可能。請做好研究並謹慎投資。 ———— 正文開始———— 上個月Polygon Labs向社群提出將Polygon升級的提議。在提議中，原來的代幣MATIC將會轉換為POL。新的Polygon公鏈允許用戶創建、交換和編輯設計“價值”。 昨天Polygon的聯創Sandeep Nailwal又在X平台上發了一篇長文，再度表達了他對升級版Polygon的信心。 <img src='https://static.fansone.co/images/abc782e2-6f0e-4cef-8f89-5b683ed344f0.jpg'>發文中強調 POL 是MATIC重大的技術升級。它提供用戶多鏈質押的好處，無不必冒著額外再質押的風險。新提案將 Polygon 生態系統從單鏈擴展到一個可以輕鬆互操作並共享流動性的 L2 生態系統。 POL在再質押方面的創新包括： <ul><li>嵌入式 restaking 完全避免了對受信任的第三方的依賴，從而創造了更少的中心化向量。</li><li>POL 不僅可以保護公鏈本身，它還可以保護網路結構中的 Agg 層（Aggregation layer）和DAC（data access layer） 等。</li></ul> &nbsp;<blockquote>* 傳統三層式網路架構既有的三層式網路架構，指的是核心層（Core&nbsp;Layer）、匯聚層（Aggregation Layer）以及數據存取層（Access&nbsp;Layer）所架構出來的網路。</blockquote> Nailwal還指出，Polygon 從頭打造構建了 POL，成為史上第一個具有超級生產力的“第三代代幣”。第一代是比特幣BTC，它沒有任何機制能讓代幣持有者參與網絡安全。第二代是以太幣ETH，它允許代幣持有者質押以保護以太坊網絡。在 Nailwal 看來，POL 是第三代，它允許代幣持有者保護多個網絡並執行多重角色。 那麼，這般信心滿滿的發言，在低靡的熊市中是否能為$MATIC起到拉抬的作用呢？ </p

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